Answers
Please do provide more information, like account names, debits and credits. I don't see the full picture here.
Related Questions
MotoSport is buying an asset that costs $730,000 and can be depreciated at 20 percent per year (Class 8) over its eight-year life. The asset is to be used in a three-year project; at the end of the project, the asset can be sold for $740,200. The company faces a tax rate of 26%. The sale of this asset will close the asset class. what is tax on CCA recapture
Answers
The tax on the CCA recapture is $306,332.
To calculate the tax on the Capital Cost Allowance (CCA) recapture, we need to determine the CCA claimed over the years and calculate the recaptured amount. The recaptured amount is the difference between the proceeds from the sale of the asset and the undepreciated capital cost (UCC) at the time of sale.
Given that the asset costs $730,000 and has a depreciation rate of 20% per year (Class 8) over eight years, we can calculate the CCA claimed each year:
Year 1: $730,000 * 20% = $146,000
Year 2: $730,000 * 20% = $146,000
Year 3: $730,000 * 20% = $146,000
Year 4: $730,000 * 20% = $146,000
Year 5: $730,000 * 20% = $146,000
Year 6: $730,000 * 20% = $146,000
Year 7: $730,000 * 20% = $146,000
Year 8: $730,000 * 20% = $146,000
The total CCA claimed over the eight years is $1,168,000.
At the end of the project, the asset can be sold for $740,200. The UCC at the time of sale is the original cost of the asset minus the CCA claimed:
UCC = $730,000 - $1,168,000 = -$438,000
Since the UCC is negative, there is a recapture of CCA. The recapture amount is the proceeds from the sale minus the UCC:
Recapture Amount = $740,200 - (-$438,000) = $1,178,200
Now, we can calculate the tax on the CCA recapture by multiplying the recapture amount by the tax rate:
Tax on CCA Recapture = $1,178,200 * 26% = $306,332
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What is meant by the concept entrepreneur?
Answers
Answer: An entrepreneur is someone who has an idea and who works to create a product or service that people will buy, as well as an organization to support that effort.
Explanation: An entrepreneur takes on most of the risk and initiative for their new business, and is often seen as a visionary or innovator.
I NEED HELP PLEASE PLEASE I BEG
The article claims "Import taxes from 60% to 100% in the world's fourth-largest car market rank among the highest globally, drawing criticism from companies such as Tesla Inc (TSLA.O)Links to an external site., which shelved entry plansLinks to an external site. because of the high tariffs." Why is it that the Indian government has allowed so far 60% - 100% tariffs on imported cars? Your answer needs to be found in the article OR in the chapter that you learnt (3). NOT in Internet desktop research! (50-75 words, 5 pts).
Why are Maruti Suzuki, Tata Motors and Mahindra resisting this change? Again, use the article and what you have learnt in class. NO desktop research. (50 words max, 4 pts).
All else equal, would the WTO - a priori - be pleased about this potential development? Meaning a possible reduction of Import Taxes or Tariffs. If yes why? If no why? (50 words max, use your arguments based on the textbook material AND/OR Internet research here!, 3 pts)
Say you're a resident of India, and you were planning to buy a Range Rover made in the UK. All else equal, and given this article, and given you have the money available to buy the car - would you, a priori, buy the car or postpone your purchase? If yes why? If no why? (50 words max, 3 pts)
PLEASE I NEED HLEP
Answers
The Indian government has allowed such high tariffs on imported cars in order to protect domestic car manufacturers such as Maruti Suzuki, Tata Motors and Mahindra, who would otherwise face competition from foreign companies and face a possible decrease in their market share.
What is domestic?Domestic refers to activities or relationships that occur within a country or nation, such as domestic policy, domestic trade, domestic travel, and domestic affairs. Domestic activities are usually distinguished from international activities, as those that occur between two or more countries. Domestic activities are generally related to the internal affairs of a country and its citizens, including political, social, and economic issues.
Maruti Suzuki, Tata Motors and Mahindra are resisting the potential change because they are concerned that they would be unable to compete against foreign companies, who would be able to offer cheaper cars due to the lower tariff rates.
The WTO would not be pleased with this potential development because it is against their objective of free trade and would create an uneven playing field between domestic and foreign companies.
If I were a resident of India and planning to buy a Range Rover made in the UK, I would postpone my purchase because the high tariff rates would make the car much more expensive than it would normally be. This would mean that I would have to pay significantly more for the same car than if I had bought it from a domestic manufacturer.
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The appropriate discount rate for the following cash flows is 8 percent compounded quarterly.
Year Cash Flow
1 $ 870
2 950
3 0
4 1,540
What is the present value of the cash flows?
Answers
Answer:
Total PV= $2,736.39
Explanation:
Giving the following information:
Year Cash Flow
1 $ 870
2 950
3 0
4 1,540
First, we need to calculate the real annual discount rate:
Quarterly Discount rate= 0.08/4= 0.02
Real annual interest rate= [(1+i)^n] - 1
Real annual interest rate= [(1.02^4) - 1]
Real annual interest rate= 0.08243
Now, we can calculate the present value of the cash flows:
PV= Cf/(1+i)^n
Year 1= 870/1.08243= 803.75
Year 2= 950/1.08243^2= 810.82
Year 4= 1,540/1.08243^4= 1,121.82
Total PV= $2,736.39
A Market share is usually stated as a
Answers
Answer:
stock
Explanation:
a stock is a a share of a company
Understanding what the team is working on, encouraging wild ideas, and never rejecting an idea simply because it sounds too crazy are examples of _______ at IDEO.
Answers
Answer:
Understanding what the team is working on, encouraging wild ideas, and never rejecting an idea simply because it sounds too crazy are examples of _______ at IDEO.
Deviance
Explanation:
At IDEO, deviance is equally encouraged just as conformity is also encouraged. Deviance simply means non conformance to expected ways of doing things. IDEO has recognized the importance of innovation in its product designs. It is important to note that innovation comes in many shapes and sizes, and it is only through diversity in thought that people can recognize opportunities for innovation. This is while it forms teams to bring in the two aspects that encourage innovation: conformity and deviance.
Common-size percents LO P2 Simon Company's year-end balance sheets follow. At December 31 Current Yr 1 Yr Ago 2 Yrs Ago Assets Cash $ 29,076 $ 33,644 $ 34,015 Accounts receivable, net 85,123 60,680 47,668 Merchandise inventory 109,166 80,184 49,287 Prepaid expenses 9,269 8,832 3,857 Plant assets, net 265,161 245,794 215,773 Total assets $ 497,795 $ 429,134 $ 350,600 Liabilities and Equity Accounts payable $ 122,711 $ 71,073 $ 47,205 Long-term notes payable secured by mortgages on plant assets 94,521 96,727 76,708 Common stock, $10 par value 163,500 163,500 163,500 Retained earnings 117,063 97,834 63,187 Total liabilities and equity $ 497,795 $ 429,134 $ 350,600
Express the balance sheets in common-size percents. (Do not round intermediate calculations and round your final percentage answers to 1 decimal place.)
SIMON COMPANY
Common-Size Comparative Balance Sheets
December 31, 2015-2017
2017 2016 2015 Assets % Cash % Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net % Total assets :% Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Screenshot(Alt + A) Common stock, $10 par Retained earnings % Total liabilities and equity
Answers
Answer:
Simon Company
SIMON COMPANY
Balance Sheets
At December 31 Current Yr 1 Yr Ago 2 Yrs Ago
Assets % % %
Cash $ 29,076 5.8 $ 33,644 7.8 $ 34,015 9.7
Accounts receivable, net 85,123 17.1 60,680 14.1 47,668 13.6
Merchandise inventory 109,166 21.9 80,184 18.7 49,287 14.1
Prepaid expenses 9,269 1.9 8,832 2.1 3,857 1.1
Plant assets, net 265,161 53.3 245,794 57.3 215,773 61.5
Total assets $ 497,795 100 $ 429,134 100 $ 350,600 100
Liabilities and Equity
Accounts payable $ 122,711 24.7 $ 71,073 16.6 $ 47,205 13.5
Long-term notes payable
secured by mortgages
on plant assets 94,521 19 96,727 22.5 76,708 21.9
Common stock,
$10 par value 163,500 32.8 163,500 38.1 163,500 46.6
Retained earnings 117,063 23.5 97,834 22.8 63,187 18.0
Total liabilities and equity $497,795 100 $429,134 100 $350,600 100
Explanation:
a) Data and Calculations:
SIMON COMPANY
Balance Sheets
At December 31 Current Yr 1 Yr Ago 2 Yrs Ago
Assets
Cash $ 29,076 $ 33,644 $ 34,015
Accounts receivable, net 85,123 60,680 47,668
Merchandise inventory 109,166 80,184 49,287
Prepaid expenses 9,269 8,832 3,857
Plant assets, net 265,161 245,794 215,773
Total assets $ 497,795 $ 429,134 $ 350,600
Liabilities and Equity
Accounts payable $ 122,711 $ 71,073 $ 47,205
Long-term notes payable
secured by mortgages
on plant assets 94,521 96,727 76,708
Common stock, $10 par value 163,500 163,500 163,500
Retained earnings 117,063 97,834 63,187
Total liabilities and equity $ 497,795 $ 429,134 $ 350,600
b) The computation of Simon's common size balance sheet enables the comparison and analysis of the relative percentage of each asset, liability, and equity account. The computation takes a line item and divides it by the value of total assets or total liabilities and equity, as the case may be. The resulting decimal value is multiplied by 100 to obtain the percentage.
What is the easiest virtual learning program? (I’m tryna change programs)
Answers
Answer:
Udacity.com
Explanation:
I love using this its so easy and assemble come try it out!
Answer:
Khan Academy.
Khan Academy provides many courses you can study in, ranging from math to technology.I hope this helped at all.
For its first year of operations, Tringali Corporation's reconciliation of pretax accounting income to taxable income is as follows: Pretax accounting income $300,000 Permanent difference (15,000 ) 285,000 Temporary difference-depreciation (20,000 ) Taxable income $265,000 Tringali's tax rate is 25%. Assume that no estimated taxes have been paid. What should Tringali report as income tax payable for its first year of operations?
Answers
If no estimated taxes have been paid. the amount that Tringali will report as income tax payable for its first year of operations is $71,250.
Income tax payableUsing this formula
Income tax payable=(Taxable incomex Tax rate)+Temporary difference depreciation
Let plug in the formula
Income tax payable=($265,000 x 25%)+($20,000×25%)
Income tax payable=$66,250+$5.000
Income tax payable=$71,250
Inconclusion the amount that Tringali will report as income tax payable for its first year of operations is $71,250.
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On June 15, 2021, Allen sold land held for investment to Stan for $65,000 and an installment note of $300,000 payable in five equal annual installments beginning on June 15, 2022, plus interest at 10%. Allen’s basis in the land is $255,500. What amount of gain is recognized in 2021 under the installment method?
Answers
Using the installment method means that the amount of gain that will be recognized in 2021 is $27,857.14.
How to use the installment method to find gain recognized?When a payment is to be made in installments, then the gain to be recognized in a year can be found by the installment method:
= Profit margin x Amount paid in 2021
The Profit margin can be found by the formula:
= ( Selling price of land - Seller's basis in the land) / Seller's basis in the land
= ( ( 300, 000 + 65, 000) - 255, 500) ) / 255, 500
= 109, 500 / 255, 500
= 42. 857 %
The gain to be recognized on the land sold by Allen to Stan is therefore:
= 42. 857 % x $ 65, 000
= $27,857.14
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How are SAE programs expanded and/or diversified?
Answers
Answer:
The SAE programs could be extended even diversified using the following techniques.
Explanation:
Increased self-employment has led to something like the SAE programs. Rather than growing the breadth of this. The concept seems to be the volume, gross margin, quantity of acres, respectively. By introducing or growing new goods as well as companies. This would be referred to those as diversification. Whilst also connecting to the awareness acquired via the SAE programs.design an approach that your team would recommend for Joseph and Nicholas to cover one area each that you deem necessary to aid in the planning and controlling functions
Answers
The combines strategic planning, performance measurement, effective communication, and continuous improvement to support Joseph and Nicholas in their planning and controlling functions. It ensures a well-defined direction, data-driven decision-making, collaboration, and a focus on growth and adaptability.
In order to aid in the planning and controlling functions, the following approach can be recommended to Joseph and Nicholas:
1. Establish Clear Objectives and Goals: The first step in planning is to establish clear objectives and goals for the team. It is important to have a clear understanding of what needs to be accomplished and what the team's priorities are.
2. Assign Responsibilities: Assigning specific responsibilities to team members helps to ensure that everyone is working towards a common goal. Joseph and Nicholas should each be assigned to cover one area that is necessary for planning and controlling functions. This will help to ensure that all aspects of the project are covered and that there is no overlap or duplication of efforts.
3. Develop a Schedule: Developing a schedule that outlines the key milestones and deadlines for the project is essential to effective planning and control. This will help to ensure that the project stays on track and that deadlines are met.
4. Monitor Progress: Regularly monitoring progress against the schedule and objectives is necessary to ensure that the project is progressing as planned. This will help to identify any issues or problems that arise and allow for corrective action to be taken.
5. Communicate: Effective communication is critical to the success of any project. Joseph and Nicholas should establish a regular communication schedule to ensure that everyone is up-to-date on the project's progress, any issues or problems that arise, and any changes to the schedule or objectives.
6. Make Adjustments: Finally, it is important to be flexible and make adjustments as needed. If the project is not progressing as planned, adjustments may be necessary to the schedule or objectives to ensure that the project stays on track and that goals are met.
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Determine the missing amount:
Assets=Liabilities+owners Equity x 272000 573000
Answers
Based on the given amounts of assets and liabilities, the missing amount of Owner's equity is $301,000
How to find the equity?The Owners equity is one of the parts of the Accounting equation which is:
Assets = Liabilities + Owners Equity
The Assets in this instance is $573,000 and the Liabilities are $272,000.
The Owner's equity is the missing amount and it can be found as:
573,000 = 272,000 + Owners Equity
Owners Equity = 573,000 - 272,000
Owners Equity = $301,000
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Paul’s grocery received 1,000 pounds of onion at $0.11 per pound. On the average, 3% of the onions will spoil before selling. Find the selling price per pound to obtain a makeup rate of 180% based on cost.
Answers
The selling price per pound for onions to obtain a makeup rate of 180% based on cost is $2.0350.
What is the selling price per pound for onions?Total Cost = Quantity * Cost per pound
Total Cost = 1,000 pounds * $0.11/pound
Total Cost = $110
Spoilage Quantity = 3% of Quantity
Spoilage Quantity = 3% of 1,000 pounds
Spoilage Quantity = 0.03 * 1,000 pounds
Spoilage Quantity = 30 pounds
Effective Quantity = Quantity - Spoilage Quantity
Effective Quantity = 1,000 pounds - 30 pounds
Effective Quantity = 970 pounds
Makeup Rate = 180%
Selling Price per pound:
= (Total Cost * Makeup Rate) / Effective Quantity
= ($110 * 1.80) / 970 pounds
= $2.03505/pound.
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definition of industries in priciples of buisness
Answers
Answer:
1. Understand Organizational Structure and Design
You need a basic understanding of how good businesses run effectively. From its initial structure of departments and personnel to how individual projects are managed, you need to run your business as effectively and efficiently as you can.
2. Use Capital and Cash Flow Wisely
Your business needs to start with a good financial base, but equally important will be a positive cash flow as you grow and develop. You need to have sufficient funds to pay your employees and vendors so you produce your products and sell them at a profit.
3. Understand the Fundamental Principles of Accounting and Finance
Understand and obey fundamental principles of accounting and finance, and always adhere to the regulations and laws that affect your industry. Obtain necessary permits, complete and file taxes, and pay strict attention to filing deadlines.
4. Respect Your Customers
Your customer may not always be right, but you always need to do whatever you can to make things right. Provide them with the best possible products and services you can deliver and always treat them with respect and understanding. If they become dissatisfied with your products or your services, do your best to quickly resolve the issue with patience and consideration.
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Explaining your business partner has decided he wants to merge your business-healthy foods-with former competitor beta burger. He’s told you about the advantages, but you’ve got your doubts. What possible disadvantages about the merger would you explain to your partner before you both make your decision?
Answers
Prior to deciding upon a merger with Beta Burger, certain potential drawbacks should be examined:
What possible disadvantages about the merger would you explain to your partner before you both make your decision?Brand Misrepresentation: Merging with a formerrival could bewilder patrons regarding the values of your business. They may possibly associate it with cheap fast-food outlets, conversely deterring those desirous of eating healthy meals.
Cultural Contradiction: Should the cultures at both companies be contrary in nature, it could result in arguments and an absence of collaboration among workers from either side. This discord could then have an adverse impact on morale and productivity for the staff.
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Grace Electronics recently rolled out a wearable personal music device. Within 90 days of launch reports
of faulty battery leads overheating reached the company's executives; in one case, a child suffered
burns on his neck. Match each item in their strategic response plan with the appropriate stage in the
process:
1. Stage 1
2. Stage 2
3. Stage 3
4. Stage 4
5. Stage 5
6. Stage 6
Company decides if a recall is
necessary and how to best
proceed
Company engineers design a
new battery housing using heavier
gauge wire
Company launches a public
information campaign notifying
consumers of the recall
2 Company pulls the product
from their retail stores and web site
Customers who elected to
3
receive a refund are sent a check
while those who wanted the
improved player receive a new
player with a full warranty
4
Consumers who registered
their product receive postage-free
boxes to return defective players.
Answers
Grace Electronics implemented a strategic response plan after reports of faulty battery leads overheating in their wearable personal music device, including a recall, public information campaign, and refund/replacement options for affected customers.
Grace Electronics faced a serious issue with their wearable personal music device when reports of faulty battery leads overheating led to a child being burned on their neck.
In response, the company implemented a strategic response plan with several stages.
In Stage 1, the company decided if a recall was necessary and how to proceed.
In Stage 2, the company engineers designed a new battery housing using heavier gauge wire.
In Stage 3, the company launched a public information campaign notifying consumers of the recall.
In Stage 4, the company pulled the product from their retail stores and website.
In Stage 5, customers who elected to receive a refund were sent a check while those who wanted the improved player received a new player with a full warranty.
Finally, in Stage 6, consumers who registered their product received postage-free boxes to return defective players.
Through this strategic response plan, Grace Electronics was able to mitigate the risks associated with the faulty battery leads and restore consumer confidence in their products.
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can banks create money?
Answers
Answer:
yes
Explanation:
most of the money in our economy is created by banks in the form of banks deposits - eg the numbers that appear in your account. Banks create new money whenever they make loans
What is the total number of questions available on the Brainly platform and where can I find them?
Answers
Problem 8, MacroSoft Inc. has capitalized $600,000 of software costs. Sales from this product were $360,000 in the first year. MacroSoft estimates additional revenues of $840,000 over the product’s economic life of 5 years.
Instructions
Prepare the journal entry to record software cost amortization for the first year. Show all computations.
Answers
Journal Entry:
Date: [First year-end date]
The amortization expense for the first year is $120,000.
Debit: Amortization Expense - Software Cost - Year 1 ($600,000 / 5 years) = $120,000Credit: Accumulated Amortization - Software Cost - Year 1 ($600,000 / 5 years) = $120,000Explanation:To record the software cost amortization for the first year, we need to allocate a portion of the capitalized software costs as an expense. Since the software has an estimated economic life of 5 years, we divide the total software cost ($600,000) by 5 to determine the annual amortization expense. In this case, the amortization expense for the first year is $120,000. We debit the Amortization Expense - Software Cost account to recognize the expense and credit the Accumulated Amortization - Software Cost account to accumulate the amortization over time.For more such questions on Journal Entry
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Ratios are generally calculated from historical data. Of what use are they in assessing
the firm’s future financial condition?
Answers
I would say by the firm calculating their reports from before it usually shows where the company should stand for tears to come
Explanation:
Why is it relevant that finance tends to attract large amounts of money? a. Money can be used for good or evil b. Finance attracts people from around the globe c. Financial markets are a critical components of economic success d. All of the above
Answers
Answer: c. Financial markets are a critical components of economic success
Explanation:
Economic success runs on companies and individuals being able to produce goods and services for the economy. To be able to do so they need capital to invest and most times they don't have that capital.
This is where Finance comes in. It connects people who do not have the capital but want to produce to those that have the capital but do not necessarily want to produce.
The huge amounts of money that finance attracts is channelled to those who need it. They then produce and the economy becomes successful.
in 2014, the action movie john wick made about $14.5 million in its opening weekend. in 2017, john wick: chapter 2 made about $30.5 million in its opening weekend. the consumer price index in 2014 was 236.7. if the consumer price index in 2017 was 245.1, how much did the first john wick movie make in 2017 dollars?
Answers
The first John Wick movie made $15 million in 2017 dollars.
Consumer Price Index: The consumer price index (CPI) tracks variations in the average price of products and services that a reference population buys, uses, or pays for consumption over time.
Consumer price index is a broad index that estimates price changes in a basket of products and services that is representative of consumer spending in an economy. The CPI estimating process involves some very precise calculations.
What does the CPI for 2022 look like?
The Consumer Price Index for All Urban Consumers grew 9.1% in the year that ended in June 2022.
If the CPI increases, it indicates that the average rate of change in price over time has increased. Over time, this results in modifications to the cost of living and income (presumably so that income is adjusted to meet a higher cost of living). Indexation is the name given to this procedure.
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contents of the workmen's compensation act
Answers
Answer:
The Workmen's Compensation Act, 1923 provides for payment of compensation to workmen (or their dependants) in case of personal injury caused by accident or certain occupational diseases arising out of and in the course of employment and resulting in disablement or death. The Act was last amended in 1976.
Hope this answer is right!
A brochure is a professional, effective, and inexpensive way to provide information to your ______________.
Question 5 options:
friends
teachers
parents
target audience
Answers
Answer:
target audience
Explanation:
i took the test
What is a major implication for HRM that has resulted from technical advancement? *
Answers
Assume the value of a country's currency is 1 when the price level is 0.6 If the price level changes to 1.75, by how much in percentage terms will the value of the country's currency change?
Answers
The rate of percentage terms that the value of the country's currency will change is -99.429 percent.
What is the country's currency about?
A national currency is the medium of exchange for buying goods and services and is considered legal tender issued by the central bank or other monetary authority of a nation. The Federal Reserve regulates the value of the dollar, which is the main form of money in the US.
Note that from the question:
When the price level is 0.6, the value of money:
= 1/0.6 = $1.667.
When the price level is 1.75, the value of money = 1/1.75 = $0.571.
Therefore, The percentage change is ((0.571 − 1.667)/1.667 × 100
= -99.429 percent.
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What material best described by "a heavy durable fabric with a short thick velvety nap on one side: a woven cloth with a suede-like appearance with a nap less that 1/18th of an inch"?
Answers
Doeskin is a strong durable fabric with a short thick velvety nap on one side: a woven cloth with a suede-like look with a nap less than 1/18th of an inch. Hence, the correct answer is Doeskin.
What exactly is Doeskin material?Tightly milled, twill weave, face finish, 100% Merino wool. It has a weight of 390gsm and a width of 142cms, and it comes in a variety of traditional and modern colors. The moniker "Doeskin" came from the fabric's resemblance to the skin of a female deer. Doeskin is the velvet-like split hide of an adult female deer. It is extensively utilized in the production of gloves. It rapidly receives dye. A tightly woven medium-weight wool fabric with a short soft nap, akin to duvetyn, is also referred to by the word.
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Which of the following is NOT a reason why strategy matters to businesses?
Strategy defines a company’s current and future goals and objectives
Tying financial models to strategies of a business helps generate more insightful analyses
Understanding a company’s strategies allows financial analysts to make reasonable assumptions in performing forecasting
Having a strategic plan helps reduce uncertainty about the future and prepare to explore new opportunities
Answers
There are other reasons that strategy matters in business, but tying financial models to business strategies does not help to generate more insightful analyses. Option B is correct.
Why the strategies are important for the business?Strategy assistance us in shaping our business by furnishing it with a set of values and a sense of purpose. It enables us to comprehend what success entails.
A company's strategy defines its underway and upcoming ends. It is used in to enables financial analysts to make common, sensible forecasting assumptions.
Therefore, option B is correct.
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Flaherty Electric has a capital structure that consists of 70 percent equity and 30 percent debt. The company's long-term bonds have a before-tax yield to maturity of 8.4 percent. The company uses the DCF approach to determine the cost of equity. Flaherty's common stock currently trades at $45 per share. The year-end dividend (D 1) is expected to be $2.50 per share, and the dividend is expected to grow forever at a constant rate of 7 percent a year. The company estimates that it will have to issue new common stock to help fund this year's projects. The flotation cost on new common stock issued is 10 percent, and the company's tax rate is 40 percent. What is the company's weighted average cost of capital, WACC? A. 10.30% B. 10.73% C. 7.48% D. 9.89% E. 11.31%
Answers
Answer:
Option B is correct
WACC= 10.73%
Explanation:
Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund
WACC = (Wd×Kd) + (We×Ke)
After-tax cost of debt = Before tax cost of debt× (1-tax rate)
Kd-After-tax cost of debt
Ke-Cost of equity
Wd-Weight f debt
We-Weight of equity
After tax cost of debt = (1-T)× Before-tax yield on debt
= (1-0.4)× 8.4
=5.04%
Cost of equity = Do/P(1-F) + g
D= Year 1 dividend= 2.50
P- price of stock = 45, F= Flotation cost= 10%, g= growth rate= 7%
Cost of equity =( 2.50/[(1-0.07)× 45]) + 0.07= 13.2%
WACC = (Wd×Kd) + (We×Ke)
We= 70%, Wd= 30%
WACC= (13.2%× 70%) + (5.04%× 30%)
= 10.73%
WACC= 10.73%